Skullcandy revealed that founder, Richard Alden, was possibly buying some or all of the company’s common stock, and potentially pursuing a “going private” transaction, in a filing Tuesday with the Securities and Exchange Commission.

Alden intends to make a proposal to Skullcandy about a potential transaction, the filing reported. The founder and director owns about 2.7% of the company directly, and controls 12.7% of SkullCandy via holding company, Ptarmagin.

Skullcandy, which markets largely to millennials, first went public mid-2011, with a closing price of $20 a share. The stock has fallen 77% since, as competition in the headphone space continued to heat up.

A potential takeout range for the stock would be around $5.50 to $6.50--40% to 65% above shares’ Tuesday closing price of $3.93, MarketWatch reported, citing Wunderlich Securities.

Skullcandy has previously partnered with artists including Rita Ora, Jay-Z, and Snopp Dogg to design, and endorse its products. More recently, NBA All-Star Kyrie Irving was given an equity stake in the headphone maker as part of his deal to endorse Skullcandy.

]]>http://fortune.com/2016/06/08/snoop-dogg-skullcandy/feed/0Skullcandy Sessions Live At Sundance - 2015 Park CitylucindashenHarman hoping for slam dunk with NBA headphone dealhttp://fortune.com/2014/09/17/nba-headphones-harman/
http://fortune.com/2014/09/17/nba-headphones-harman/#respondWed, 17 Sep 2014 17:00:12 +0000http://fortune.com/?p=790868]]>Harman International has signed a multi-year pact with the National Basketball Association, a bet that exposure to the basketball court can lead to slam-dunk sales of headphones and speakers.

The deal, set to be formally announced Wednesday at an event at Harman's HAR store in New York City, includes a licensing partnership that will allow Harman to sell team- and player-branded headphones and portable speakers. NBA players won’t be required to wear Harman’s headphones while warming up or walking around the locker room, though the company is hopeful exposure from the pact will lead to greater interest in its products.

The basketball player-headphone connection is stronger than it appears at first glance. Major names like Dwyane Wade have been featured on headphones in the past, and LeBron James reportedly realized a profit of more than $30 million in cash and stock in the Beats sale to Apple AAPL after he struck a deal to get a small stake in the company in exchange for promoting its headphones.

“Music is how these athletes train, when they are focused [on the courts], a lot of times they are wearing headsets,” said Harman Chief Marketing Officer Ralph Santana.

Harman’s partnership with the NBA is exclusive and replaces a prior arrangement with rival Skullcandy SKUL, which previously sold NBA headphones. Santana told Fortune that a new line of NBA-gear by Harman should hit retail shelves in about six months.

Premium-priced headphones, like the ones Harman sells, have driven much of the industry’s growth as consumers spend more time listening to music with their mobile gadgets. Demand has been particularly strong for headphones meant to be used while participating in sports--so strong that Harman in June acquired Yurbuds LLC, a U.S. sports headphones brand.

Harman has claimed consumer research shows that more than 70% of consumers won’t work out without music, but that nearly 90% say their headphones hurt or fall out while working out–so there’s an unmet need headphone makers can address with the right product. The sports headphones Harman intends to sell include some fitness-oriented design features, including better durability and greater water resistance.

Harman has been placing a bigger bet on the consumer market (it also sells gear for concert halls, stadiums and automobiles) and the NBA pact--which focuses on the company's JBL brand--is the latest way Harman is angling to tackle the competitive consumer market. The NBA deal will most directly affect Harman’s lifestyle division, which includes the sale of headphones, speakers and other audio products meant for individual consumers. The lifestyle division generated nearly $1.7 billion in sales for Harman’s latest fiscal year, and some analysts say the business could grow to $2 billion in sales in the next two years.

Financial terms of the NBA deal weren’t disclosed.

]]>http://fortune.com/2014/09/17/nba-headphones-harman/feed/0Miami Heat v Golden State Warriorsjohnnerkell10 Questions: Hoby Darling, CEO, Skullcandyhttp://fortune.com/2014/07/17/10-questions-hoby-darling-ceo-skullcandy/
http://fortune.com/2014/07/17/10-questions-hoby-darling-ceo-skullcandy/#respondThu, 17 Jul 2014 16:03:54 +0000http://fortune.com/?p=742270]]>When he was in college, Hoby Darling sustained a knee injury while playing football. Today, he thinks it’s probably one of the best things that ever happened to him. Originally from the small town of Cashmere, Wash. (population: 3,145), Darling aspired to be a high school teacher and coach. It wasn’t until after his injury that he realized he was meant for something bigger.

He returned to school to earn a bachelor’s degree in history. Then he enrolled in law school at Northwestern University. After graduation, he became a corporate strategy lawyer at the Volcom apparel company, where he rose through the ranks and worked on international e-commerce products. He enjoyed the business aspect of his work so much that he went back to school to earn an MBA in a joint program between the University of California, Berkeley and Columbia University.

After six years at Volcom, the company was acquired by PPR (the French luxury goods company that owns Puma and Gucci). Darling left to work as a general manager for Nike+, the digital innovation group of the U.S. sportswear company NKE. Soon he received a call from Skullcandy, the Park City, Utah-based company known for its colorful headphones, asking if he was interested in becoming its chief executive. In March 2013, he said yes.

Skullcandy faces stiff competition from major players in the personal audio industry. Darling says he wants to make his company’s products part of an active, affordable lifestyle. Darling, 39, spoke with Fortune.

1. Who in technology do you admire most? Why?

I think about technology and innovation together to some degree. Although it's not usually thought of as a technology company, I'm going to say Nike and its president Trevor Edwards and its CEO Mark Parker. Nike does a great job of obsessing around the consumer and combining technology, innovation, and design. [Trevor and Mark] are both people I look up to. A lot of technology companies build products and then try to find a consumer for them. Then there are those companies like Nike who are very consumer-oriented and try to take the friction points away from products.

2. Which companies do you admire? Why?

Besides Nike, the cheat answer would be Apple AAPL, but I would actually go a different direction and say Zappos AMZN. It's not necessarily the technology that they bring; it's about their people and obsession on the consumer. When you look at great companies that we want to emulate, putting the consumer and people at the base of the pyramid is something that is essential and something Zappos has successfully done. You can take that across industries.

3. Which area of technology excites you most?

That's an easy one, being in the audio space. The things that are going on around audio are super exciting. I think there is a lot of innovation we can help drive that will help people live better lives and better unlock all that we are capable of from a human performance standpoint. If you think about your five senses, vision gets most of the bandwidth has had a ton of technology, like Google Glass or even just better theater and television experiences. No one's really pushing audio, though, but as we know from a lot of studies, audio is how a lot of people learn the best. The part that really excites me, having been a former athlete and thinking about performance, is that we're learning so much about how our brains are affected by music and other audio inputs. Whether that's to perform better, longer, or with more concentration, audio innovation is going to help unlock a lot of human potential.

4. What advice would you give to someone who wants to do what you do?

I think the greatest thing that I've learned--coming from a small town, where my ambition was to be a history teacher and a football coach, and then living dreams that I never really imagined--has been that, when something excites you, follow it. Two things that I think have worked for me have been to follow opportunities and be willing to take a risk. When you decide to go for them, go with everything you've got. Never worry about getting knocked down because you can get back up--and you have to learn how to do it over and over again.

5. What is the best advice you ever received?

My football coach in college always said to be a tough-minded optimist, and it was that belief that you can have any success if you are willing to work hard enough. You should be tough enough to run through a wall and not let other people slow you down if you believe that what is on the other side is great. I love that idea. Believe that you can do it. Don't let anybody stand in your way.

6. If you could have done anything differently in your career, what would it have been?

Probably be in the moment a little bit more. There have been so many fun times where you accomplish something and then you think, "Go, go, go." And instead, you should live in the moment and think, "Look at what we we’re able to do!" and enjoy it before moving on.

7. What was the most important thing you learned in school?

As a small-town kid, I think the biggest thing I learned was that if I worked hard enough, I could do well no matter where I was. I started at a small town high school, then I went to a regional college, and then I jumped to Northwestern, one of the best law schools in the country. Then I got into business school at Berkeley and Columbia. I don't think I was ever the smartest guy in the room, but I could outwork just about anybody.

8. What do you do to live a balanced life?

There was a great article in the Harvard Business Review recently about this subject, and I read it and reflected about myself and what I agreed and disagreed with. I came to the realization that if you want to be at the very top of your game, you're never going to have a balanced life in the typical sense. Olympians never live a balanced life. The best of the best just are not balanced.

So I think the question is not necessarily how you live a balanced life, but instead, how do you live a happy and high performing life? And I think that the answer to that is, every moment that you are in, you should actually be in it. I work really hard, and every hour I'm at the office, I'm 100% at the office. As soon as I leave the office, I am 100% with my 4-year-old daughter, my 6-year-old daughter, and my wife.

I don't think anyone who's successful has a typically balanced life, and I am not even sure that would be fun and exciting. It is more about making sure that when you are doing things that are important to you; you are 100% in the moment and finding ways to enjoy them.

9. What was the last book you read?

The last full book I read was Turn the Ship Around! An admiral in the [U.S.] Navy named David Marquet wrote it. It was a book that our CCO gave me because when I joined Skullcandy, we were definitely in a turnaround, and this book is about this guy that takes over the worst performing submarine in the naval forces. He takes it from being the worst performing submarine with low morale to the number one performing submarine in the forces for a long time. It was all about empowering people and performing as a team. It fit so perfectly, and it was super inspiring. It wasn't just about changing processes; it was about getting a team excited and believing in the future and each other.

10. What is one unique or quirky habit that you have?

I wake up every morning at 4:30 to do CrossFit. Also, I don't like to comb my hair, so I always wear a hat.

Other headphone manufacturers, such as Skullcandy SKUL and Harman HAR, will likely be affected “very little in the short-term,” said Aram Sinnreich, an assistant professor at Rutgers University who writes about music, technology, and media.

However, the future might not look quite so rosy for other streaming services, such as Spotify and Pandora P.

“They’re not making money,” Sinnreich said. “But Apple can afford to lose money on music the way they always have.”

For years, Apple’s music business has been based on purchased, downloaded songs. Now, though, consumers are far more interested in streaming services of the type Apple would get in a Beats acquisition.

“Apple was kind of artificially buoyed for the last decade by having created this download market,” said Sinnreich. “The future is clearly in streaming.”

Despite the streaming market being “Apple’s market to lose,” Sinnreich said, they’ve not been able to capitalize on it. iTunes radio, launched in 2013, has not been a roaring success.

For some, the question is why Apple went after Beats in particular. On CNBC Friday, Jim Cramer asked why Apple didn’t spend a bit more money to acquire Pandora. Sinnreich said Pandora was, frankly, “a little long in the tooth.”

Pandora can’t offer on-demand streaming, or algorithm-determined playlists based on tastes. Consumers “want to be able to order the content that they’re interested in,” Sinnreich said.

Sinnreich also noted that the battle for the streaming market really boils down to two experiences: the one in the car, and the one in the living room. In the car, music is the primary content, while in the living room it is on-demand video. If he were Spotify, Sinnreich said, he’d diversify his offerings, bringing the fight into the living room to compete with services such as Netflix, Hulu Plus and Amazon Prime. This would be an especially good move if the rumors of Netflix getting into the streaming music game turn out to be true.

“I think it makes sense for streaming services to battle with Netflix on their own terms,” he said.

Right now, music services like Spotify are hoping to eke out a margin on streaming music, something Sinnreich just doesn’t see happening.

]]>http://fortune.com/2014/05/09/where-does-apple-deal-leave-beats-rivals/feed/0clyons2014Skullcandy’s service dudehttp://fortune.com/2011/12/21/skullcandys-service-dude/
http://fortune.com/2011/12/21/skullcandys-service-dude/#respondWed, 21 Dec 2011 10:00:33 +0000http://test-alley.fortune.com/2011/12/21/skullcandys-service-dude/]]>FORTUNE — Why outsource to India when you can tap your biggest fans to handle customer service? Skullcandy, the maker of high-end headphones, has pulled people from its core demographic of snowboarders, skateboarders, and surfers to help customers on its website via online chat. That includes surfers like Spencer Hirsch, 25, of San Diego, who occasionally logs in to chat with Skullcandy customers. Hirsch earns $10 an hour, but he also scores points to win free Skullcandy headphones and iPads if he can answer customer questions. Call it “fan sourcing,” the next frontier of customer service. –Jennifer Alsever

Skullcandy didn’t invent the formula of selling audio gear as if it was fashion. But in a few short years, it has used it to grow a thriving business that dominates the headphone market among teens and twenty-somethings. The lifestyle brand — which markets mainly to snowboarders and skateboarders — went public this July. Now, Skullcandy must continue to grow without alienating the core customers that gave it legs to begin with.

The company, founded in 2003 in Park City, Utah, made its mark selling colorful, street art-inspired audio gear in an iPod white or everyone-else-black world. Skullcandy SKUL earned a reputation for innovation, releasing rococo over-the-ear headphones as well as earbuds designed to stay put and tailored-made for its action sport crowd. The appetite for trendy headsets has grown since the company started, largely due to the ubiquity of smartphones that double as music players. Varied brands like Sony SNE, Bose and the Beats by Dr. Dre have gotten a big boost from the trend. The US market for headphones this past year was $2 billion, up 79% from last year, according to NPD.

Even in a booming market, Skullcandy has done remarkably well: a healthy IPO announced last summer; a 57.5% increase in sales from last year at this time; and the acquisition of Zurich, Switzerland company 57 North in August, which has marked Skullcandy's entry into Europe. These are good strides for the company, but they also bring potential problems.

Overexposure has been a concern for the company ever since it first became stylish. CEO Jeremy Andrus is aware that the more successful Skullcandy becomes, the more it risks losing touch with its base. "The discussion we have everyday is: How do we remain relevant to the core consumer?" he says. "It's important to our business model to treat them as we did in the earliest days of the business, when they were our only customers." (The company’s previous CEO was ousted one month before its IPO.)

What’s changed, besides an influx of profits? Hardcore snowboarders and skaters are not the only customers anymore. After initially being sold exclusively in specialty stores like Zumiez or Tilly's, now Skullcandy products are available at major retailers everywhere, including Best Buy BBY and Apple AAPL Stores. That risks over-exposure.

Every burgeoning company faces a balancing act between growth and freshness — Ben and Jerry's is a classic example — but it seems to be more of an issue for Skullcandy because the brand's fate is hinged so directly on a youth subculture deeming its products cool. How easy is that to lose? "Easy. So easy. It's very delicate," says Dean Crutchfield, branding expert and CEO of Caffeine, an international business growth consultancy.

Andrus believes he has an approach that he says will help the company avoid a backlash: spending a large chunk of marketing dollars on those smaller specialty stores, even though the national retailers bring in the bulk of revenue. Andrus declined to comment on just how much of the pie goes toward that demographic, but says it is "a very high percentage." He sees it as a long-term investment, as opposed to an inefficiency. "That kid — that core customer walking into a skate shop or a lifestyle shop — that individual is a trendsetter," he says.

That strategy could help Skullcandy maintain its connection to its roots. Action sports cultures place a premium value on obscurity: lesser known bands, local shops, hidden skate spots. Off the wall headphone designs were meant to give users a distinct means of expression. "It's about a unique point of view, the attitude of a tribe," says Crutchfield, the branding expert. Brands like Red Bull energy drinks and Vans shoes have pulled off similar moves, even after years of plentiful growth.

Even more changes are underway for the company: it seeks to expand its line of gaming headsets and has a higher end headphone model in the pipeline for 2012. As it expands, successful growth will mean nurturing its core crowd throughout an entire lifetime, says Crutchfield. "Remember that 15-year-old snowboarder?" he says. "Well, maybe he's married now. But he's still got that bit of attitude, right?" Skullcandy has served its tribe well so far. Its true test will be avoiding becoming just another fashion trend that, eventually, went out of style.